I Made 9 Bold Broadcom Predictions One Year Ago

At the start of 2024, I made nine predictions for VMware users facing the uncertainty of Broadcom's VMware acquisition. There have been many turns in the road since then, so let's check out how those predictions played out. The results may surprise you!

Prediction Outcomes

1. Some VMware customers will pay more: True

This was easy to predict and played out as expected. Customers experienced effective price increases when perpetual licenses were eliminated, when new minimum core counts exceeded physical server cores, and when individual high-volume products such as vSphere Ent+ were eliminated. Customers were given no choice but to buy product bundles with feature entitlements for products, such as vSAN, they may have had no intention of using.

Many independent reports support that customers are paying more, including industry analyst Forrester Research who highlighted reports of price increases ranging from 400% to 700%. Scharon Harding of Ars Technica similarly noted that VMware customers reported a 300% rise in costs.

2. Legacy storage payback periods will lengthen: True

vSphere Ent+ is most frequently attached to legacy storage because this SKU includes the virtual distributed switch and distributed resource scheduler features that solve noisy neighbor VM problems required for enterprise environments.

When customers pay more for VMware products, the aggregate cost for legacy storage attached to virtualized servers is correspondingly more expensive, extending the payback period of virtualized servers. Some customers have even looked at reverting to bare metal, although they quickly realized that the resiliency, day 2 operations, and security value of virtualized environments make HCI a more logical landing spot for today's enterprise workloads.

I believe this will have long-term results as customers plan a path to safety. Gartner recently stated, "By 2028, cost concerns will drive 70% of enterprise-scale VMware customers to migrate 50% of their virtual workloads."¹

3. Channel partners will reduce VMware investments: True

Broadcom severed channel relationships for the largest VMware customers, initially taking approximately the top 2000 VMware direct accounts, effectively removing significant channel partner fulfillment, support and services revenues.

According to ChannelE2E, Broadcom cut 10,000 of VMware's 28,000 channel partners, which leads to the incontrovertible conclusion that less channel investment will be applied to selling, servicing, and supporting VMware products. For 100% channel companies, including Nutanix, this reseller dynamic is a tailwind for driving preference to convert customers to alternative platforms.

4. Expect Dell, HPE and Lenovo to similarly reduce VMware investments: Missed this one!

Infrastructure decision-makers don't move quickly and VMware OEM partners continue to support VMware offerings while customers work through their off-ramp strategies.

Take note, however, that server OEMs are leaning into alternatives. Cisco and Dell both signed expanded partnership agreements with Nutanix, which will help customers minimize exposure to further Broadcom pricing, support, and legal actions.

5. VMware EUC offerings may become more open: Not yet but stay tuned!

I was a little early in the prediction but directionally correct. Broadcom's definitive agreement to sell the VMware's EUC business, rebranded Omnissa, proved to be true and this sets the stage for a more open platform stance for Nutanix from what was a closed VMware environment.

6. VMC may no longer be a VMware-managed service: Partial credit for this one

Broadcom essentially blew up the VMware hybrid cloud strategy with Hock Tan proclaiming that hyperscalers were introducing cost, complexity, and compliance risk and that the future of infrastructure is the private datacenter.

Amazon responded quickly and decisively. AWS stopped selling VMC and then increased investment with Nutanix. While Broadcom espouses a return to cloistered physical datacenters, Nutanix envisions a connected hybrid multicloud future where apps and data can be optimally located across edge, datacenter and public cloud environments - supported by integrated platform security, a consistent operating model, and fully portable licensing.

7. Dell may shift VxRail focus to PowerFlex: True

Broadcom inserts risk for partners, like Dell, similarly as it is for customers. Nutanix publicly committed to introduce AHV support for Powerflex with Nutanix Cloud Platform which is the first time Nutanix will support a converged storage system.

In addition, Dell is now partnering with Nutanix to offer the hyperconverged Dell XCPlus appliance, a Dell-branded alternative to VxRail with factory-loaded Nutanix software.

8. DPU Adoption May Slow: Debatable

The adoption of DPUs in the datacenter has been near zero. So, it's tricky to say that Broadcom slowed adoption in the past year. However, Broadcom's focus on mature products would suggest that this new technology area will be relegated to the back burner.

9. Customer support may change: True

Customer support at VMware is rapidly changing, driven by re-orgs, shifts in reseller coverage, and divestiture of product lines. The EU has raised concerns with Broadcom about its changes to licensing and support.

The fallout has even led to legal action, with AT&T claiming that Broadcom had "breached contract" and was "bullying" them into buying Cloud Foundation at a price 1,050% higher than before. There is a high sensitivity in enterprise infrastructure to support and no question that fewer channel partners are investing in Broadcom.

Nutanix can help you build a more predictable future

Nutanix is pleased to be offering customers certainty and trust in a time of great upheaval. We have the great fortune to be a trusted advisor to 26,000 existing customers while we help new customers manage Broadcom risk.

We are ready to help customers build out a 3 to 5 year infrastructure strategy for how to manage Broadcom risk today and incorporate innovations in containers, Gen AI, and hybrid cloud tomorrow.

To learn more, visit www.nutanix.com/vmware-alternative.

¹ Gartner, Inc, Market Guide for Server Virtualization, 28 August 2024, Michael Warrilow, Philip Dawson, Tony Harvey, Elaine Zhang. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

©2024 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo and all Nutanix product and service names mentioned herein are registered trademarks or trademarks of Nutanix, Inc. in the United States and other countries. Nutanix, Inc. is not affiliated with VMware by Broadcom or Broadcom. VMware and the various VMware product names recited herein are registered or unregistered trademarks of Broadcom in the United States and/or other countries. All other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s). Our decision to link to or reference an external site should not be considered an endorsement of any content on such a site. Certain information contained in this content may relate to, or be based on, studies, publications, surveys and other data obtained from third-party sources and our own internal estimates and research. While we believe these third-party studies, publications, surveys and other data are reliable as of the date of publication, they have not independently verified unless specifically stated, and we make no representation as to the adequacy, fairness, accuracy, or completeness of any information obtained from a third-party.

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